Extreme heat in Australia’s cattle regions and a global leather shortage created by China’s appetite for luxury goods have pushed prices up by 20 per cent in the last six months for Wollongong high-end tool belt maker
Buckaroo Leatherworks
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“Leather is in demand [among] China’s middle class. The amount they’re buying is creating a shortage all over the world," said Buckaroo owner Tanya Van Der Water.

Queensland tanner Packer Leather, which supplies RM Williams and Kookaburra cricket balls, has seen prices for raw cow hides jump 30 per cent to 50 per cent, particularly in the last eight months, due to increased demand from car makers.

“Prices are the highest I’ve seen them in 20 years," said David Tanner, a fifth-generation craftsman in what could be the nation’s last surviving tannery.

Leather shortages in the United States and Europe are compounding supply constraints.

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Ms Van Der Water expects another price hike before June. Buckaroo, which makes high-end tool belts and accessories for tradesman and miners in Wollongong, just south of Sydney, is responding to the pressure by investing $500,000 in upgrading its facilities to increase volume so it can fulfil larger contracts in south-east Asia.

“We’re looking at other ways of reducing costs, new machines and technology," said Ms Van Der Water.

The measures are aimed at tripling production by making tasks easier. None will replace workers.

Buckaroo plans to recruit and train 20 staff in the next two years on the back of three large contracts with Australian mining, oil and gas, and procurement companies working on large-scale projects in Vanuatu, Papua New Guinea and China.

“These are high volume numbers," said Ms Van Der Water. “The sample for the procurement company [working on a big Chinese infrastructure project] was 10,000 tool belts."

Offering a high-end, Australian-made product has given Buckaroo a competitive edge, according to Ms Van Der Water. “It’s almost a prestige thing; they [the Chinese] don’t want to buy Chinese-made products," she said.

‘I’m trying to create jobs and they’re penalising me’

Buckaroo Leatherworks is targeting additional sales of $2 million for the 2015 fiscal year on top of current earnings on the back of these large south-east Asian supply contracts.

The rising price of raw materials has shaved 5 per cent to 10 per cent off Buckaroo’s profit during the 2013-14 financial year, while revenue has risen 30 per cent.

Ms Van Der Water hopes the company’s investment initiatives will claw some, if not all, of this lost profit back.

The expansion will double Buckaroo’s headcount to just under 50 staff.

Ms Van Der Water hopes to tap the federal government’s export market development grants scheme, which was increased by $50 million to help small and medium-sized companies with annual turnover under $50 million export more.